SO YOU WANT TO BE A HOME
PERFORMANCE CONTRACTOR…
So you want to be a home performance contractor. / Well, listen now to what I say… / Just get a
blower door / And take some time and learn how to test. (with apologies to the Byrds)
by GREG THOMAS
o how do you get
started in the home
performance business?
As with many building science questions, the answer is,
it depends. It depends on
what you are doing now. Are
you currently a contractor? If
so, what type of contractor?
Or are you thinking of starting up a new company? It
depends on how much risk
you are comfortable with. Do
you want to manage people
and projects, or would you
rather be a trusted advisor
without having to worry
about any employees? And it
depends on where you live.
What type of climate do you
live in? What types of construction are typical where
you live?
Analyst Jerone Gagliano involves the homeowner in the infrared scan of his home.
Once you work your way
through this maze of questions, you need to put
together a business process that supports all the stages of your
two companies combined currently have 32 staff members.
contact with the customer. This type of business is different in
Most of these staff members were hired in the last five years,
important ways from a typical contracting or consulting busifueled by a growing demand for home performance services.
ness, so understanding all of these stages will increase your
Along the way, I have written a number of articles for Home
chances of success.
Energy on the development of the home performance business.
Our company has also supported home performance programs
in New York, California, and Wisconsin with consulting, trainMy Background
ing, and software services. We have also interviewed successful
home performance contractors from around the country, and I
Twenty-five years ago, I built a blower door and started
coauthored a report on how these contractors manage their
offering whole-house audits. I was working for a heating conbusinesses (see “Strategies for Success,” HE Mar/Apr ‘04, p. 24).
tractor who had started out setting up wood stoves and solar
Over the last 25 years, I have seen a number of contractors
hot water systems and now wanted to move into doing more
try to implement the home performance business model withcomplete work on houses. Fast-forward 25 years. I now own
out understanding how all of the pieces of the puzzle fit
two companies. Performance Systems Contracting, Incorpotogether. More recently, I have seen more and more contracrated is a home performance contracting company that installs
tors understand how to make this business work and succeed.
and retrofits heating and cooling systems, insulation, windows,
Still, there are risks. I hope this article helps you to reduce
and solar and wind energy systems. Performance Systems
your risks in starting a home performance business.
Development, Incorporated develops software and provides
training and consulting services all over the United States. The
S
ROB GARRITY
4
HPC—A BUSINESS DEVELOPMENT GUIDE
www.homeenergy.org •
HOME ENERGY
Treating a home from a whole-house
perspective means taking control of the
home’s flows of energy, heat, air, and
moisture, and producing an indoor environment that will truly satisfy customers
and turn them into the best advertising
any contractor could have: happy customers who are excited to tell others
what you did to their homes.There are a
few prerequisites before you can get to
this point. First, you will need to have
adequate tools and training (see “A Toolbox Primer,” p.7). Both require a substantial investment of time and money. Next,
you have to find customers who want
you to put those tools and training to
work, and you have to be able to turn
that knowledge into a scope of work and
put a price on it. You have to know how
long it takes to get things done, how
much things cost, and how much it costs
to be in business. Then you have to produce a legal contract and maybe even a
report and put them in front of the customer for a signature. And if you can find
financing for your customers, then more
of them will be able to sign that contract.
Once they sign, you have to order
materials and mobilize your workforce.
You have to make sure all of your staff
and subcontractors know what they are
doing, and you have to make sure that
they have everything they need. You
have to make sure that everyone stays on
schedule and stays safe. If you are subcontracting, you have to make sure that
someone else’s employees do all the
things that you would want them to do if
they were your employees. Then, once
the work is done, you have to make sure
that it measures up to your expectations
and to the expectations of the customer.
And you or your employees have to test
the building again after the work is done,
making sure that the entire workscope
was completed and that no safety problems were created in the process. Then
you have to make sure that you keep
track of all of your expenses and that you
make enough money to go on to the
next job. Through all of this you need to
make sure that everyone has all the skills
and knowledge that they need to do
their job, even the ones who just got here
last week.
And, as in any business, to be a successful home performance contractor
you must have business systems, and
HOME ENERGY • www.homeenergy.org
you must be able
to manage those
systems successfully to consistently
and
profitably turn out
the desired product.
Successful
businesses
are
designed
as
machines that create a consistent
product, even in a
service business
like contracting.
This consistent
process is the
“business” side of
your business. You
need to have a
consistent process
Emelie Cuppernell enjoys a cup of coffee while reading about her favorite
for answering the
home performance analyst in the local newspaper.
phone and scheduling
appointments. You need
to be able to track the status of each of
homeowners to reduce their energy use
your jobs, and you need to be able to
and the resulting greenhouse gas emisproduce an invoice and know how to
sions. It is truly right livelihood.
collect money from your customers.
Differentiation. “I want to be difTracking and feedback is an essential
ferent and better and maybe charge
part of managing and improving your
more for my work.” Depending on the
process. If you are just getting into the
image of your company that you want
business, spend as much time learning
to develop, you might like to be seen as
about running a business as you spend
different from and better than the next
learning about fixing houses—maybe
contractor. Home Performance with
even more. If you are in a contracting
Energy Star is an EPA program
business already, be aware that a home
designed to help contractors differentiperformance business requires more
ate themselves from other contractors
complex and robust systems than a
who are not using testing.
trade-based business may have.
Risk avoidance. “Problems are eatSounds easy, doesn’t it? —NOT!
ing up my profits.” Taking control of
the flows in buildings and understanding building science allows you to avoid
Why Do It?
callbacks and performance failures.
Those callbacks have a bottom-line
For all of the difficulties associated
impact of the wrong type.
with starting any new business or steerProfits. “I want to be part of the
ing an existing business in a different
next big thing.” You want to grow your
direction, there are some very good reabusiness, and you see home perforsons to get into home performance conmance as an expanding market with a
tracting. Here are my top five reasons:
lot of potential.
Ethics. “I want to do the right
Business stability. “I lay off too
thing.” Despite the bad reputation that
many trained people in the off season.”
contractors have, I have met a lot of
Insulation and HVAC trades traditioncontractors who really want to do the
ally have fairly seasonal profiles and
right thing. And home performance
struggle not to lay off trained staff in the
does the right thing. Home perforoff season. This increases costs and
mance is doing quality work that also
reduces the number of trained staff
happens to be good for the planet.
available. Most successful home perforThrough this work, you will be helping
ROB GARRITY
The Big Picture
HPC—A BUSINESS DEVELOPMENT GUIDE
5
have recurring customer relationships,
because they make annual clean and
tune service calls. When a customer’s
HVAC system fails, they have to know
Starting Points to Entry
how to respond fast. So their businesses are typically built on a fast cusWhere you are now with your busitomer turnaround. HVAC contractors
ness activities largely determines how
also require more highly trained techyou will get to where you want to be.
nicians and may not have the right sales
Here are some typical starting points
staff to do home performance inspecand the issues that you are likely to
tions, or the right crew to crawl
encounter with each one.
through attics.
Home inspectors and energy
raters. Home inspectors and energy raters
have low overheads
and few employees—
usually because that is
the way the owner
likes it. The best
money in home performance is in delivering the entire package
of services. Selling
full-price inspections
(if you install, you can
hide part or all of the
cost of inspection in
the cost of the job)
and taking the time to
train subcontractors
and maintain the qualLexie Hain works to create an airtight closure for an above-grade crawlspace.
ity of their work is not
an easy proposition.
Remodelers. When remodelers
Insulation and window (buildwalk into a house, the first thing they
ing shell) contractors. Most building
do is listen to the customer to find out
shell contractors do not have strong
what the customer needs. They don’t
ongoing customer relationships; they
assume that they will be installing
serve one customer and then move on
insulation or a furnace and that that
to the next one. The building shell
will solve the house’s problems.
market also has few barriers to entry,
Remodelers are also used to managing
meaning that just about anyone with a
complex logistics for their business
pickup truck can get into the business.
process, so coordinating a wholeThis creates more of a commodity marhouse retrofit is not hard for them.
ket, where low price is critical to sucBut do they see that the home perforcess. Building shell contractors who
mance market can be big enough to
want to get into home performance
deserve their full attention?
need to know how to identify cusWeatherization agencies or nottomers who might be interested in
for-profit housing groups. Weathertheir product and selling these cusization and not-for-profit groups may
tomers on a more comprehensive
be looking for a way to protect themhome performance solution to their
selves against inevitable state and federal
comfort and energy problems. Adding
funding shifts. But they have a hard
HVAC into the workscope can be a
time changing the way they work, and
tough step for this type of contractor.
there is usually little incentive for manHeating and cooling (HVAC)
agement to take on all the extra work
contractors. HVAC contractors often
mance businesses have a different cycle:
way too busy and just plain busy.
ROB GARRITY
6
HPC—A BUSINESS DEVELOPMENT GUIDE
required to set up and run a for-profit
subsidiary.
Start-ups. Entrepreneurs don’t have
to support an existing business model
while they change to a new model. But
they don’t have any business systems
either, and they have to create them
from scratch. Can they create the right
systems at the right time and grow
while staying out of trouble?
Steps to Getting Started
There is no cookbook recipe for getting started in home performance. To
paraphrase another famous band, sometimes you just got to get out on the
street and start testing. While you are
building up some experience in testing
buildings, try to make sure you cover
these bases also:
Develop a list of local problems.
You need to understand the climate drivers and the housing problems that are
most common in your market. Solving
these problems has to be the focus of your
business. So keep a list and check it more
than twice. Typical problems involve
• comfort (cold or hot rooms);
• health (mold, CO, poor ventilation);
• durability (moisture control, window condensation, peeling paint); and
• efficiency (high energy bills).
What causes these problems in your
climate and housing stock? What will
you recommend to solve the problems?
Can you deliver that service, either with
your own crews, with subcontractors, or
with supervised contractors? This list
will form an important part of your
marketing efforts.
Choose your business model.
What type of business model will you
use to deliver services? Here are some of
your choices:
The consultant. Do you want to be a
trusted advisor? Is being seen as a third
party important to you? Do you want
to avoid the obligations of high overhead
and the hassles of managing employees?
One variation of the consultant model is
to work as a subcontractor to an
installing contractor. You help them sell
jobs and they pay you to do the inspections. But be sure that you can trust
them to deliver quality work. It is your
reputation that will be on the line.
www.homeenergy.org •
HOME ENERGY
A Toolbox Primer
What performance-testing equipment
will you need to start to diagnose problems in houses? You are going to want
to measure the basic flows through the
building—air flow, moisture transport,
heat flow, and energy use. This list covers the minimum equipment you will
need, and then suggests several other
items that will likely be useful.
Blower door. Like the song says,
start by getting a blower door and learning how to test. The blower door is the
fundamental tool for inducing pressures
and measuring air leakage in buildings.
It allows you to feel and see, with the
help of artificial smoke, the sources of
the leaks. And you can begin to test
duct leakage with a blower door
combined with a digital manometer.
Carbon monoxide measurement.
As you start to work on a building—
whether you are installing insulation, air
sealing, putting in new heating
equipment, or changing a duct system—
you change the pressure relationships in
that building. This work can introduce
carbon monoxide (CO) into the building
from combustion appliances. So being
safe means testing, knowing the specific
level of CO being produced, and being
ready to take appropriate action.
Digital manometer. The manometer
takes the information provided by the
blower door and moves you into a
whole new realm of knowledge. You
can now measure just how connected
one part of a building is to another,
and you can measure the effects of
depressurization on the combustion
systems—another key safety test.
Combine a digital manometer with a
pressure pan and a blower door, and
you can start to measure how
connected the ducts are to the outside.
Air flow measurement. Basic comfort testing requires that you measure
the flow of air in and out of heating and
cooling supply and return registers.
Basic health and safety testing requires
that you measure the flow of air out of
exhaust fans. Air flow measurement can
be done using a digital manometer and
various or adjustable orifice plates, or
even garbage bags. Or you can invest in
HOME ENERGY • www.homeenergy.org
a balometer. These tend to be less accurate at low flows, so be careful.
Thermometers. Two digital
thermometers allow you to measure temperature differences, such as the temperature rise on heating equipment or the
drop across cooling equipment. And you
can measure all sorts of other things—
such as outside air temperature (for
adjusting blower door numbers), hot
water temperatures, and so on. Make sure
that they are calibrated with one another.
Digital hygrometer or sling
psychrometer. To understand moisture
conditions, it is critical to measure relative
humidity, which can be accomplished with
either of these instruments. Eliminating
condensation is the key to avoiding mold
and moisture damage inside a house.
Computer and software. A computer
and an energy-modeling tool will teach
you a tremendous amount about how
buildings actually use energy. If you
know where energy is being used, and
you know the most cost-effective choices
for reducing energy use, you can make
the best recommendations for your customers. Use your computer to look at
the energy bills also. Your energy model
should be adjusted to predict close to
what the bills will actually be, so that
your savings predictions are reasonable.
Saving energy isn’t the only reason people invest in their buildings, but it does
create the most positive cash flow. Software is also used to determine the proper
size of the heating and cooling
equipment. And you can use a computer
to create reports, do estimates, and run
your business.
Now you have enough equipment to
start really understanding what might be
going on in the buildings you are
testing. What other equipment might be
useful?
Combustion efficiency. Actually
measuring the combustion efficiency of
the heating equipment can help you to
know when to recommend that the HVAC
equipment be replaced.
Infrared camera. An infrared camera
allows you to see heat loss and heat gain,
which is a great sales tool; it is something
that people intuitively understand. It
helps you diagnose problems quickly and
differentiates you from the competition.
Duct Blaster. The Duct Blaster is a
sort of mini blower door that helps you
to measure the size of the hole in ducts,
just like a blower door tells you how
leaky a house is.
Watt-hour meter. Appliances are
contributing to an increasing percentage
of our total energy bill. A watt-hour
meter allows you to meter the energy use
of an appliance during a sampling period
and then predict energy use over the
course of a year.
Tru flow air flow meter. This gauge
is another extension of your digital
manometer; it lets you quickly measure
air flow across a heating or cooling system. Reduced distribution system air
flow causes many efficiency and comfort
problems.
Refrigerant gauges. Measuring
refrigerant charge will help you to diagnose and treat underproducing cooling
equipment.
Wood moisture meter. A wood
moisture meter allows you to determine
if wood is wet enough to be at risk for
developing rot or mold. A wide range of
meters are available.
Data loggers. We use data loggers for
all sorts of testing, typically in multifamily or commercial buildings. In singlefamily houses, they are great for testing
attic air temperatures and for getting a
quick look at how often heating or cooling equipment is cycling on and off.
Don’t be overwhelmed by all this
equipment. To get the right work done
on a building, you will need to know how
to test buildings, and you will need to
understand energy and moisture flows.
However, testing by itself does not save
energy. Customers investing in improvements are what saves energy and creates
real value. You will need to know how to
test buildings—but you will also need to
set up your business, get customers, and
deliver services. Keep in mind that delivering real value is the foundation of successful and sustainable businesses. And
that is exactly what home performance
delivers—real value.
HPC—A BUSINESS DEVELOPMENT GUIDE
7
whole-house job, are your customers
getting that really big boost in comfort
that makes them create referrals for the
next five years or more?
The whole-house option. You put it all
together in one shop. You control the
quality and the schedule. And you get
the profits. But you also get the
headaches, and you have to be able to
manage a wide
variety of types
of work and staff.
Certain business
models
drive
faster growth, and
this is one of
them. If you are
creating
and
maintaining the
customer relationships, you
control the flow
of work. If you
are doing whole
house, you create
larger jobs and
need fewer customers.
And
doing the work
with your own
Jason Whitmarsh puts the final touches on a recently enclosed stairway, once a
crews, if you do it
massive chase between unconditioned and conditioned space.
well, typically
creates higher
profits than subcontracting the
work.
Energy-efficient
mortgage facilitator.
In a few places—
most notably in
California—general contractors have
below-market rates may not be easy.
used federal mortgage programs to help
This can work if you have the marketcreate a market for whole-house
ing skills that the subcontractors lack
improvements. They use consultant
and can keep them busy and happy.
energy raters to set the scope and calcuSubcontractor. The general contracting
late savings and then bring in subconmodels described above presume that
tractors to get the work done. This is a
there are subcontractors delivering the
variation of the general-contractor
installation services. You can be that
model, where the emphasis is on mainsubcontractor, if that is what you prefer.
taining the connection to the banker
If installations are your forte and marand realtors to get a steady stream of
keting is something you do because you
business referrals.
have to, subcontractor status may be just
The decision to be a prime contractor
the right fit.
or a subcontractor is a key one. Do you
Trade-based contractor. You may not do
have the capital you will need to get
all the work to do a whole-house job,
started with equipment and some modbut as a trade-based contractor you do
est marketing, and then to make payroll
at least half, and you subcontract for the
and pay suppliers? Do you have the necrest. But is it really worth the hassle of
essary marketing skills? Are you a people
subcontracting? And if you don’t do a
General contractor. General contracting
works if you can keep down your cost
of subs and if jobs are intermittent and
you don’t want to try to carry employees over the slow periods. But one of
the basic tenets of home performance
contracting is doing quality work. Getting quality insulation and HVAC subcontractors to work for you for
ROB GARRITY
Being in this business means
“making
a commitment to learning.”
8
HPC—A BUSINESS DEVELOPMENT GUIDE
person, or are you more comfortable
doing the work and testing the houses?
Do you want to engage in a long-term
process of learning about building science and performance testing? Are you
familiar with the contracting business?
Do you want to take financial risks in
return for potential payoffs? In the end
your choice of how you fit into this business is as much about your own personal
goals and desires as it is about the specific
requirements of a business model.
Assemble Your WholeHouse Installation Team
Whole-house work has the biggest
impact on the customer. On top of that,
generally speaking, the bigger the job, the
simpler it is to get the business model to
work. So how do you assemble a wholehouse team? Who needs to be on the
team, and what do they need to know?
And where do you find these people?
The whole-house home performance business consists of
• testing in and testing out of buildings for both efficiency and safety;
• installing heating, cooling, and ventilation equipment, and improving distribution systems—the meat of home
performance;
• installing insulation and air sealing—the potatoes of home performance;
• installing windows and doors—
because the customers want them and
you don’t want to send those customers
elsewhere;
• doing foundation work and grading—sometimes necessary, but not often
enough to justify buying heavy equipment; and
• having appliances and lighting readily available.
So where do you find the members
of your installation team? Are they
employees, subcontractors, or marketing
partners? Start by looking for people
who understand the value of learning
new things. Being in this business means
making a commitment to learning. If
your team members are not interested in
learning, then you have to spend a lot of
time supervising or cajoling them. If
they are interested in knowledge and
self-improvement, then building science
and performance testing will feed their
soul. So look for your team members in
www.homeenergy.org •
HOME ENERGY
places where people are learning. Look
at the presentations put on by local trade
groups. Look at who is carrying the
most technical products at the home
shows. Look in online technical discussion groups. Look for people who are
engaged in green building-related activities. And look for people who understand the value of doing quality work.
Access Training
You now know what problems you
will need to know how to solve, and
what team members you will need to
solve those problems. Now you need to
make sure you know enough to be able
to diagnose the problems correctly, solve
them appropriately, and keep yourself
and your customers safe.
Start by taking advantage of any
building science-based training that is
offered by utilities or weatherization programs. Many home performance contractors get their start working for these
subsidized programs. You may not see
this as a long-term business proposition,
but these programs typically provide
good training, and working for them is a
HOME ENERGY • www.homeenergy.org
great way to build experience before you
go out into the market. The training
may be based on the program priorities,
but the physics is always the same.
Home Energy publishes a list of trainers
and training centers (see HE July/August
’05, p. 26, or visit www.homeenergy.org).
This is a good place to start looking.
Many utility programs have their own
internal training programs, so don’t
neglect to find out about locally available
training options.
Get training for your crews also, and
set up an internal training plan. Other
good resources include Insulate
and Weatherize: Expert Advice from Start to
Finish by Bruce Harley, Residential
Energy by John Krigger and Chris
Dorsai of Saturn Resource Management; and the Best of Home Energy, vol.
2, a CD-ROM with over 250 articles
selected based on their usefulness to
home performance contractors.
Conferences are another great training
resource, most notably the ACI (formerly
Affordable Comfort) national and
regional conferences. These events are
very contractor focused and provide a lot
of value.
Opportunity Abounds
There’s a lot of opportunity out there
in existing buildings. They keep building
more buildings with problems each year.
Only 25% or so of the new-construction
market is built to Energy Star standards.
So the market for improving existing
homes is not going to go away any time
soon. The question is, do you have a
business model that can tap into this
market, and can your business model
withstand the ups and downs of energy
prices and the variations in subsidies and
tax credits and any errors you might
make along the way? This business
clearly requires a complex business system, but there is a lot of value to be provided using performance testing and
building science to solve problems.
Someone is going to find a way to create
that value at a profit. Will that someone
be you?
Greg Thomas is president of Performance
Systems Contracting, a home performance
contracting business, and of Performance
Systems Development, a national consulting
firm supporting contractors and efficiency
programs.
HPC—A BUSINESS DEVELOPMENT GUIDE
9